Cornwall and the Isles of Scilly could become Britain’s Silicon Valley, BT claims, after it announced a £132 million project using a European broadband grant that could make the county one of the best-connected rural areas in the world.

Cornwall has previously been a major “notspot” for high-speed broadband access, which businesses and the Government argue is essential for Britain’s economic growth. The new project, BT claims, will create 4,000 jobs, safeguard a further 2,000 and benefit “tens of thousands of businesses” by providing speeds of up to 100 megabits per second.

The faster broadband will be open to all communications providers on a wholesale basis, and they will then be able to sell it on to consumers. It is hoped that between 80 and 90 per cent of local businesses and homes will have access to super-fast fibre services by 2014.

Expensive fibre to the premise (FTTP) technology will be delivered to up to half of the area's businesses and homes, subject to surveys. BT is providing £78.5 million and there will be European Regional Development Fund Convergence investment of up to £53.5 million. BT claims that “computer processing and storage of files will also become more sophisticated and secure using ‘cloud computing’ technology”, which will allow more computers to use the internet’s processing power rather than relying on firms buying their own expensive systems.

“This project is very exciting news for Cornwall and the Isles of Scilly," said communications minister Ed Vaizey said. "It shows how the public and private sectors can work together to deliver local solutions to local problems. Households and businesses in this largely rural area can now look forward to having one of the best broadband connections in the world, thanks to Cornwall council’s vision, European funding and BT’s investment and expertise.”

Ian Livingston, chief executive of BT, said that the project, which is the European fund’s single biggest investment, “shows what can be achieved when people work with BT".

"The ‘final third’ of the UK is undoubtedly challenging to reach with fibre but this project shows it is possible," he said. "Our door remains open to others who are keen to work with us to bring fibre broadband to their areas.”

BT has committed to connect two-thirds of the UK to superfast broadband, but currently maintains that additional funding will be needed if the remainder of the country is to be given access to superfast internet.